A Tale of Two Cannabis Experiments

Oregon and Washington are now the only contiguous states with a regulated recreational marijuana system. But the two systems have a number of key differences in tax structure and the rules governing possession, retail and other aspects of the budding industry. (Humans Developer) 

Oregon and Washington are now the only contiguous states with a regulated recreational marijuana system. But the two systems have a number of key differences in tax structure and the rules governing possession, retail and other aspects of the budding industry. (Humans Developer) 

The banks of the Columbia River became something of a novelty this month with the early launch of recreational marijuana sales in Oregon. 

More than 200 of Oregon's medical pot dispensaries notified the state this fall with intentions to sell recreational marijuana until pot shops open late next year. The stopgap measure went live October 1, leaving the imaginary line between Oregon and Washington as the only place in the nation where you can find legal recreational marijuana for sale in state-sanctioned stores on either side of a state border. 

But Washington and Oregon actually tell two very different stories of experiments with how a regulated marijuana marketplace could work, and all eyes around the nation are eager to see how they will play out. 

Sales began in the aptly named Evergreen State in July 2014, nearly two years after voters approved a monumental move to legalize production, retail and consumption of the drug for recreation. Washington, however, did not begin with an early sales program. 

As a consequence, store owners faced daunting challenges including product shortages, establishing a supply chain from the ground up, price gouging from growers with overwhelming overhead costs and even temporary closures for the earliest retailers to open their doors. Most difficult of all: A burdensome tax system that charged a 25 percent excise tax three times along the supply chain from growers to retailers. 

More than a year later, most of those kinks have been worked out of Washington's marijuana system. Supply shortages are now a thing of the past, and prices have dropped markedly at the sales counter. 

Part of the shift can be attributed to a shakeout in the tax structure. This summer, state lawmakers agreed to get rid of the 25 percent excise tax at the producer/processor level and raise the tax rate for retailers to 37 percent. 

Altogether, the move effectively allowed store owners to lower prices for consumers. For retailers in Vancouver – home to two of Washington's most lucrative pot shops – that was a big deal before sales went live in Portland. 

So far, the Washington State Liquor and Cannabis Board has issued 205 licenses for marijuana retailers. Interestingly enough, nearly as many Oregon medical dispensaries are already selling recreational marijuana. 

Marijuana advocates are often quick to praise Oregon's system over that of its neighbor to the north. The early sales come with no sales tax attached for now. When the Oregon tax does kick in, it will be significantly lower than Washington's, meaning that consumers will likely find lower prices in Oregon. 

With a well-established system of medical growers, Oregon's stopgap measure leaves the state at virtually no risk of running into the kind of supply shortages seen early on in Washington.  

On top of that, Oregonians can grow up to four plants per home, out of public view, of course. In Washington, no one is allowed to grow at home for recreational purposes. 

Washington initially capped the number of marijuana retail licenses at 334. That could change, but for the sake of contrast, it's worth noting that Oregon has no limit. 

In the first week alone, Oregon's dispensaries have sold an estimated $11 million worth of marijuana. That mark puts the state on pace to surpass early projections. 

In Washington, sales continue to climb month after month. In the first year, the market brought in more than $64 million in tax revenue for the state, and the upward sales trend suggests that sum will look much larger by the end of this second year of legal sales.

Marijuana tax revenue will be big in Oregon, as well, but just how big is hard to tell at this point. And as for which state's experiment will prove more successful, we'll have to wait and see as the marketplace and the rules governing it continue to evolve.